A Breakthrough in Nuclear Power Plant Exports

Korea wins a $40 bln deal to build and manage four nuclear power plants in the UAE

A Korean consortium, led by Korea Electric Power Corp. (KEPCO), has been awarded a $40 billion nuclear power deal in the United Arab Emirates, the first-ever nuclear power facility project in the Middle East and the largest Korea has so far landed anywhere in the global market. The figure is equivalent to 10 percent of a total of $422 billion worth of exports the Korea’s all industries posted during 2008.
KEPCO and Emirates Nuclear Energy Corp. inked a $20 billion deal to build four nuclear units by 2020 following a summit between the visiting Korean President Lee Myung-bak and his UAE counterpart, Sheikh Kalifa bin Zayed al-Nahayan in Abu Dhabi on Dec. 27. Both sides also agreed on an additional $20 billion contract to operate and manage the newly built nuclear power units for 60 years.
The deal marks the first time Korea will export commercial nuclear power plants overseas, joining the club of nuclear power exporters, including the United States, France, Russia, Canada and Japan.
Now that Korea’s nuclear power prowess has been certified internationally by the deal, Korea is seeking to nurture the nuclear power construction industry into its mainstay exporting industry. The agreement will provide Korea with a good opportunity to expand its horizons overseas, riding on a recent global resurgence of nuclear power, since it is sure to build a bridgehead for Korea’s expanding presence in the global nuclear power construction market.
Apparently motivated by the latest deal, the Korean government announced a grandiose plan to seize a 20 percent share of the global nuclear power market or export 80 nuclear power units by 2030 with the goal of moving into the global top three nuclear powerhouses. Currently, 430 nuclear units are in operation in 31 nations, but the demand for nuclear power is projected to surge to 1,000 reactors by 2050 amid the so-called renaissance of atomic energy in the wake of climate change and declining deposits of fossil fuels.
President Lee Myung-bak on Jan. 13 presided over an emergency economic policy meeting and decided to nurture the nuclear power industry into the nation’s next-generation exporting industry.
Following the meeting, Vice Minister of Knowledge Economy Kim Young-hak was upbeat over the prospects of the Korean nuclear power exporting industry, saying, “Korea’s winning of the nuclear power deal with the UAE proved Korea’s competitive edge in the international market. If Korea lands orders for 30 nuclear units, the nation could post $400 billion worth of exports, having an effect of creating approximately 1.56 million jobs.”
In an effort to enhance the Korean nuclear power industry’s competitiveness, the Ministry of Knowledge Economy decided to activate a civilian-government R&D program calling for a combined 400 billion won in funding during the period between 2011 and 2017. Korea also decided to make a foray into the operation and maintenance market of old nuclear units whose value is estimated at 88 trillion won.
Korea has a track record of constructing and operating nuclear power units for more than half a century. The nation has accumulated expertise and experiences since Kori Unit 1, the nation’s first nuclear power plant, went into commercial operation in April 1978. Korea has grown into a nuclear powerhouse with the world’s sixth largest nuclear power-generating capacity, as the nation now operates 20 nuclear power units providing 40 percent of its electricity supply, with plans to build eight more units.
The Korean consortium, led by Korea Electric Power Corp. (KEPCO), defeated the French team of Electricite de France and Areva and a General Electric-Hitachi consortium.
It teamed up with Hyundai Engineering and Construction, Samsung C&T Corp., Doosan Heavy Industries as well as Westinghouse Electric Co. of the United States and Toshiba Corp. of Japan.
Mohamed Al Hammadi, CEO of the Emirates Nuclear Energy Corp., attributed Korea’s success to the KEPCO team’s world-class safety performance and its demonstrated ability to meet the UAE program goals.
Speaking about measures on nuclear safety, Kim Jong-shin, president and CEO of Korea Hydro & Nuclear Power Co., said in a recent roundtable discussion with an economic daily, “One of the measures is about capacity factor for measuring the soundness of nuclear power generation equipment and operation personnel’s performance, and Korea saw a nuclear power capacity ratio of 93.4 percent in 2008, quite higher than the global average of 78.9 percent and the highest among the 16 nations with six nuclear units.
Korea also had an unplanned shutdown rate of 0.35 in 2008, compared to one to three times for each reactor in the United States and France. The UAE requirement for unplanned shutdown rate was set at 0.8, so Korea is likely to acquire one-third of new nuclear unit orders, he said.
Second Vice Minister of Knowledge Economy Kim Young-hak, said Korea was ahead of the United States and France in terms of such nuclear power categories as price and technology, but they worried about the non-nuclear power sectors. As the Middle East region traditionally enjoys closer ties with Europe, Korea’s stress for a closer partnership by combining the nation’s technology and manpower with the UAE’s rich resources turned out to lead to the selection of the Korean consortium.
Doosan Heavy Industries and Construction Executive Vice President Kim Tae-woo said the global nuclear power industry suffered a setback for the past 30 years, as there was a global moratorium on nuclear reactor construction, but Korea has strengthened its presence in the development of nuclear power with continuous investments, which has contributed to Korea’s acquiring a competitive edge. Korea has managed to have a competitive edge by acquiring the technology for supplying forging billets, for which only a few countries have the ability to do.
Hyundai E&C (HDEC) President Kim Joong-kyum said the value of projects his company has done so far since its entry into the industry with a project in Abu Dhabi in 1979 is about $5 billion, and currently it is carrying out $5 billion worth of projects, so such relations with the UAE has built up trust for Korean contractors. HDEC does not have any problems in the construction of nuclear power units in the UAE, whose reactor is identical to the one now under construction for Shin Kori Nuclear Power Units 3&4 in Korea, he said, adding that the construction of nuclear power plants in the Middle Eastern country could be cheaper and faster due to such favorable factors as no winter and no workers’ unions.
Korea’s beating out France in the race for the nuclear power deal from the UAE made headlines in the French media.
For instance, Le Figaro carried a special report on Jan. 14 analyzing France’s loss to the underdog Korea. The French nationwide daily said President Lee Myung-bak made flat-out efforts to export nuclear power plants to the extent that a “war room” was set up on a basement floor of the KEPCO building.
Quoting nuclear experts from such institutions as CEA, the daily noted that Areva has been supplied with EPR-type reactor vessels by Japan, but Korea has such strong points as having powerful companies such as Doosan Heavy Industries and Construction, which makes its own reactor vessels, Hyundai E&C and Samsung E&C, as well as its shortening of the construction period by 10 months compared to the French construction estimate. nw

(top) President Lee Myung-bak chats with KHNP President Kim Jong-shin during a briefing on Shin Kori Units 3&4, now under construction with Advanced Power Reactor 1400 (APR1400). APR1400 is a 1,400MWe-class reactor, built on Korea’s own technology, which will be employed to build four nuclear units in the United Arab Emirates. KEPCO CEO Kim Ssang-su and Emirates Nuclear Energy Corp. Chairman Khaldoon Khalifa al Mubarak sign a nuclear power deal in Abu Dhabi on Dec. 28 as President Lee Myung-bak and UAE President Sheikh Khalifa Zayed bin Sultan al-Nahyan look on.

Photo by courtesy of the MCST

(top) A view of the Shin Kori Units 3&4 of nuclear power plant under construction. An artist’s conception of the nuclear power plant.